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Chavez Aims to Take on 'Mafia' with Venezuelan Gold Investment

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"Venezuela annually produces 11 tons gold, while alleged illegal miners extract another 10–11 tons."

Bloomberg, Daniel Cancel and Nathan Crooks

Venezuela will seek investment in the country's gold industry to boost production of the metal as illegal miners account for almost half the country's output.

Venezuela is producing "only" 11 metric tons of gold a year and alleged illegal miners extract another 10 to 11 tons a year, President Hugo Chavez said. The government will label the metal "strategic" and set geographical limits for its production in the country, he said.

"The gold mafia is taking it, and the state has to act," Chavez said today on state television. "We have to look for investors to increase production with a new vision. We can't just depend on one company."

Venezuela is facing international arbitration over nationalized gold assets from two companies including Crystallex International Corp., a Canadian gold producer. The Toronto-based company's stock plunged as much as 43% on Feb. 7 when it received a letter saying the Venezuelan government had terminated its Las Cristinas gold contract.

Vancouver-based Rusoro Mining Ltd. expects to quadruple its output of gold in Venezuela by 2013 after the government in August relaxed export limits to 50% from 30%.

Gold for immediate delivery extended declines today, falling 2.9% to $1,473.10 an ounce at 4:50 p.m. New York time.

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